Property Market Update

Here is the latest property market update and news of the latest interest rate cut.

Bank of England Cuts Interest Rates

The Bank of England announced earlier today that it will be cutting interest rates from 4.75% to 4.5%, this is the lowest they have been for 18 months.

This is the third cut since August 2024, which is great news for anyone thinking of moving in 2025. We have seen a massive uplift in sales over the past few months, largely driven by the Stamp Duty changes which come into play at the end of March.

Whilst this it great news for anyone needing a mortgage as providers will start to offer lower rates, don't expect for rates to drop back to 2021 levels anytime soon. The Bank of England has said that it will "take a cautious approach" to further cuts.

How the market has performed in recent months

Inflation dropped surprisingly to 2.5% in December and meant the annual average for 2024 ended up at 2.53% compared to 7.37% in 2023 and 9.07% in 2022.

The 10-year average for inflation is 2.98% and it was 4% in December 2023.

The return of inflation to more normal levels has meant the base rate and mortgage rates have come down ever so slightly and this has supported an increase in mortgage approvals and completed transactions.

Completed transactions from the land registry in December were 3.98% higher than November, 19.78% more than December 2023, plus they were 6.49% up on the 12-month average, but 4.2% down on the 10-year average for December.

There were 66,500 mortgage approvals in December 2024, a 1.22% increase on November 2024 and a 31.68% jump on December 2023, plus they 6.24% higher than the 12-month average for 2024, and were only 0.62% lower than the 10-year average for December.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 3 basis points, to 4.47% in December, the lowest since April 2023.

The rate on the outstanding stock of mortgages remained broadly unchanged in December at 3.79%.

The average 2-year and 5-year fixed rates remain pretty much unchanged at 5% and 4.80%.

This is the same for the lowest rates for 2-year and 5-year mortgages at 4.25% and 4.13%.

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